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tv   Nightly Business Report  PBS  September 3, 2014 6:30pm-7:01pm PDT

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this is "nightly business report" with tyler mathisen and susie gharib. >> sour apple, one day after hitting an all-time high, apple shares have the worst showing in seven months. and on the same day, rival samsung unveils a pallet of new products. coincidence or not? >> accelerating on pace for the fastest rate since before the financial crisis. >> opening the door. why the rise of choinese buyers will create opportunity in the housing market. that and for for wednesday, september 3rd. good evening, everyone. autos and apple, these were the two big headlines today for investors on wall street and consumers on main street. auto sales were red hot in
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august giving a huge boost to the u.s. economy and we'll have more on that in just a moment. but we begin tonight with apple. shares tumbled 4% today and that almost single handily dragged down the nasdaq compos index. one week ahead of what should be a shining moment when it's expe to unveil the iphone six, they closed below $99 a piece, just a day after apple shares hit an all-time high of 1$103. it caused the nasdaq to drop and the s&p lost one point. so what happened today? one analyst told investors to take profits saying he's skeptical the product launch will result in massive profit opportunities, but besides that warning, apple is facing a lot of criticism about security
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after intimate celebrity photos were stolen from individual i cloud storage accounts and then today, rival samsung unveiled two new smart phones, including one with a side display for quicker access to apps. kim joins us now to talk more about the issues that are weighing on apple today and by extension on the nasdaq today, she's senior equity analyst. kim, what are you doing? wha what is your company doing with apple shares and why? >> we didn't do anything today, but in the past, we have been taking some gains if the amount of shares held is greater than 5%. we really try not to expose our clients to any single company news, so by keeping it 5% or less in any portfolio, that takes some of the sting away from days like this. >> so it's being driven not by anything you see necessarily in the company, but by the fact the
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stock has appreciated just so that it's above the 5% threshold? >> exactly. exactly. >> all right. so let's talk a little bit about what is going on inside the company, because there are all sorts of questions. let's start with the analyst report saying that unless this product launch does something to really show massive growth at apple, you know, you should be taking your profits. what do you think will happen with this launch next week because there is talk about the iphone six out there but also some kind of watch or wearable. would that be a massive growth opportunity? is your take on this? >> i think that the price that's baked into this stock right now and why it's gone up so far so fast on really very little news is because people are ex mapect another blockbuster item. this company convinced consumers there are three products nobody in the world has had before and now we can't live without, right? we have ipads, iphones and
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before that for some of us, it was ipods. so i think we're really having huge expectations for this new product, whatever it is and that's very dangerous for investors. >> let's go back to the first question, if your company and you owned zero apple stock right now today, would you buy it? >> not right now. not at this price and certainly not with that risk. you know, owning stocks is really about mitigating risk and reward and at this point, it looks like a blockbuster item is baked into the results that people are expecting. >> so tyler keeps asking you about the stock and i keep asking about the product. so let me go back to the product. what if there isn't a wearable announced on next week on the ninth? if it's just the iphone six everybody is expecting? does the stock go way down after that? happens? >> i'll guess. that's a product and a stock question. [ laughter ] >> she's clever.
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>> anyhow, no, i think that really would be very disappointing to people and i think we heard some rumors because this a big rumor stock that even if it is a wearable or whatever the new device is, its unclear whether it will be ready for holiday 2014 and that's a big time of year for electronic sales. so, you know, we have to keep an eye out on that. the timing of whatever the device is, what the device is, how expensive it is. all of these things go into the formula of how hot this item could be. >> this company share had an amazing run of late 38% or there abilitiou abouts since the spring. if it's a phone that comes out isn't the blockbuster they hope or that the audience expects from it? >> yeah, that's really huge, as well. they have been flipping in market share not because they are selling last units, they are selling more. it's that other vendors have
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come into their space and taken away their big mojo. so they need to have some real wow factor. i didn't really watch everything about samsung today, but samsung's really made huge gains in this area. >> all right. kim, thank you very much. you don't want to lose your mojo. that's always bad. kim forest, thanks again. as we mentioned at the top of the program, august was a terrific month for auto sales, which rose more than 5% marking the best august since 2006 and putting the industry on track to sell 17.5 million units this year. the makers topped forecasts last month. phil lebeau has more. >> reporter: sales came in hotter than many were expecting. the monthly sales rate of 17.53 million vehicles is the strongest monthly sales rate for the auto industry since january of 2006 when it was 17.62 million.
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nearly every major manufacturer reported better than expected sales with chrysler leading the way. sales jumped 20% for chrysler led by jeep which had sales increase 49% for the month of august. nissan was up double digitis and the manufacturers reported better than expected sales. what was driving it? a couple things. low financing, 13% of all vehicles sold in july and august came with zero percent financing. in audition, strong consumer confidence which always is the key for driving auto sales was another factor and there is a lot of penalty up demand with the average age for a vehicle at 11 years. august auto sales, the pace 17.53 million vehicles, the strongest monthly auto sales pace since 2006. phil lebeau, "nightly business report", chicago. and in the federal reserve's so-called beige book survey
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which showed the economy got stronger across the u.s. over the summer, one of the biggest areas of growth was, you guessed it, the cars again. auto sales, six of the bank's 12 reported moderate economic growth with the remainder reporting modest growth of signs of improvement. >> part of the reason for the growth, a stronger u.s. dollar. since the end of june, the u.s. dollar index has risen 3.5% against a basket of currencies and as sarah eisen reports, with good economic data continuing to come in, the american dollar may be getting more strength. >> reporter: it's a paradigm shift, the u.s. draft flexing muscles at a one-year high against the eros and yen taking off. the reason, major central banks are seeing moving in different directions, hopes are rising that the european central bank will pump stimulus into the economy to profit up weighing on the eros and that the bank of
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japan will do the same, weighing on the yen. while central banks pump easy money into economies, it die lutes the value of currencies. at the same time, the u.s. economy is out performing. >> the pmi data looks great, the factory orders numbers look great, the auto bills numbers look great. employment trends look great. >> reporter: the strong dollar has many implications for other markets. it pressures gold and oil and often seen as currency hedges. as far as the impact on stocks, stronger dollar could ultimately hurt, especially nationals where big chunks of sales come from overseas that could hit places like proctor and gamble and fooiz pfizer and tech companies like microsoft. they are saying stay focused. >> have plenty of earnings coming from inside the u.s. after all, the economy is a bit
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stronger and broadening here and you'll have currency contention. that's what is dominating what i'm doing in my portfolios to benefit from the u.s. pickup. >> reporter: hedge funds and large speculators are the most bullish in years. as long as the u.s. economic data continues to come in strong, especially big reports like friday's job number, that could super charge this rally. a lot depends on central banks and europe and japan delivering on easy policy, both out with key decisions on thursday. for "nightly business report", i'm sarah eisen. even with the looming central bank decisions and risks from a number of international hot spots, the stock markets are near record highs, fostering what some are calling a usa mentality. steve liesman explains. >> reporter: call it a fortress usa mentality. the news abroad ranges to military gruesome.
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isis on the march in the middle east and russian forces in ukraine. two international stories in the heart of the oil production. europe, the biggest economy teeters on the verge of recession and the federal reserve and the u.s. comes ever closer to hiking interest rates. >> do you remember another time where there were more issues going around, around the world all at the same time? any one of which could overnight turn into a major disaster? do you want to talk about issues? do you want to talk about the ukraine? >> reporter: and still, stocks march higher. how realistic is this fortress usa mentality? one of the biggest surprises is the fall in the price of oil. west texas declined from $106 a barrel in mid june to around $93 today. that could be because the u.s. gets more of the oil from hot spots, imports from canada and mexico and u.s. oil production,
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now equal nearly 70% of u.s. consumption. up from below 50% in 2000. more stable oil sources mean less volatility and as europe's economy sputtered, u.s. growth strengthened with 4.2% growth in the second and 3%. markets seem pretty certain that an aggressive european central bank is about to spring into action to save from resession and inflation and u.s. economic momentum can last. >> with the evidence of the u.s. economy strengthening more and more, we're going to be creeping towards a position where the fed might get even less, less than its been recently, which could cause more. that could be a challenge for markets, as well. so as much as its good to see the economic story improving in the u.s. and doing okay else where, i don't feel my normal
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usual bulli isish self about th market. >> despite full knowledge that the fed is set to reverse course and some risk it happened sooner and they could be proven right, fortress usa could turn out to be a castle built in the sand but so far, it's with stood serious challenges for the rest of the world. for "nightly business report", i'm steve lease man. new rules for the nation's biggest banks and financial regulators. the 15 largest banks with mo$15 in assets, enough to continue operations for 30 days. smaller bank wills have to keep enough assets on hand to cover 21 days. coming up, it's been a tough go for retailers of late, but there is one category of stores that could be primed to out perform. we'll tell you about which ones they are later.
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some big changes at cvs today. the chain pulled cigarettes from the shelves a month ahead of schedule. they are charging the corporate name to cvs health and will bolster the image as a health care company. >> certainly people view us as a health care company in light of the decision, i think it further makes a statement and commitment to the focus on health. we had a successful selling season this year. we've been awarded over $5 million in new business and you still got to be right on price. you got to be right on service. some other things we're doing we think are more than intangible in terms why people put their
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trust in us. >> the stock was up almost 1% to $80.36. getting ready to pay more for health care, the growth of u.s. spending on health care was up just 3.6% last year in 2013 to nearly $3 trillion but with a rebounding economy and expanded coverage under the affordable care act, that spending growth is expected to increase on a 5.6% this year and taper off in 2015 and rise from 2016 to 2023, this as the u.s. population ages and more americans have coverage. >> we're just two months away from the midterm elections and one of the closest races for control of the u.s. senate is in the politically divided state of north carolina. and tonight, the first debate between the democratic senator and her republican challenger, john harwood is in raleigh, north carolina. john, a lot of people are
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watching this race and this debate. what makes north carolina representative of the broader contest going on in the senate? >> reporter: susie, the fight for control of the u.s. senate is going to come down to states with democratic incumbents that were carried by mitt romney in 201 2. it's true in arkansas, louisiana and here in north carolina where kay hagan first term democratic inco incumbant. >> if north carolina became a red state, why do democrats think they can hold on to this particular seat? >> even though kay hagan is on the defense sieve for obama's domestic problem, obamacare, deficit spending, that thing, international problems, you've got tim tillas the speaker of the north carolina house, he's the republican candidate on the defensive for things that north carolina legislature has been
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doing, budget cuts, tax cuts, curves on voting procedures. these have created the same controversy in raleigh than washington. >> you listed every possible issue they could be debating on, but if you had to divide it up between u.s. economic, domestic issues or international issues like what is going on in the middle east, which one do you think dominates? >> susie, so far this race has been dominated by domestic and economic issues. both in raleigh and washington, budget, spending, taxes, health care, but we're going to see if this debate tonight, an hour long beginning at 7:00 p.m. will be televised, whether or not the brutality of isis is changing focus. we've seen democratic sen tomorrows under pressure to distance themselves from president obama on this. >> a fascinating race. john, thanks so much. john harwood reporting from raleigh, north carolina. shares of delta slump and
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that's where we begin the market focus. the company warned it expects jet fuel prices to top estimates in the third quarter. it lowered the projections for a key passenger revenue met trick and it's operating growth. shares down 5% to $38.82, worst performing stock in the s&p 500 index today. infinity pharmaceuticals soared after the company said they would receive an up front payment as part of a new collaboration to develop and commercialize the treatment for blood cancer. the ceo says it's targeted therapy and others like it are getting drug makers closer to a cure. >> the next frontier for the treatment of these diseases, which is combining our targeted medicine with other targeted medicines and we think that that has the potential to take patients from a life-threatening condition towards in the near term living with their disease as a chronic condition and
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getting to more outcomes. >> shares up 44% to $15.73. it looks like tesla, the electric car maker will be opening a battery factory in nevada. it hasn't been confirmed yet but the state government has scheduled a press conference for tomorrow where it is expected to announce nevada is the site where the proposed $5 billion factory will be built. tesla shares were 1% lower to close at $281.19. shares of netflix hit a record today after the company struck a deal with timewarner and warner brothers to secure the streaming rights for the "batman" prequil. shares ended up a fraction but closed below the all-time high at $477.39. a positive research to note pushed mobile eye higher. the firm said the software company could be worth $100 a
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share by the year 2020 if it can keep close to its current market share. mobile eye makes cameras used to avoid car crashes. shares soared at 9% to $47.97. lumber liquid dliquids, sha jumped 7% to 59.$59.28. a review of alternatives thanks usually means it wants to put itself up for sale. the company, which provide s business intelligence software hired gold man sacks to assist. shares fell to $21.04 and surge in after hours trading on the news. the back to school sales are winding down, as so many kids are back to school already and retailers are gearing up now for the big holiday shopping season, but with gross margins tight and getting tighter, stores are fine tuning their inventories right now. so which retailers are poised to
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get it right and out perform the sector averages? the answer may surprise you and courtney regan has it. >> reporter: planning retail inventory can be like pleasing goldie locks. too much merchandise boggs down the balance sheet and is a frustrating shopping experience. too little inventory opens the possibility for lost sales and leads consumers to look elsewhere. the financial crisis in the following years, tau lessons like the power of proportional events to move excess inventory and the dangers of buying too much. now they are hitting it just right with some of the leanest inventory seen in a number of years. department store inventories were up 1% in the second quarter. the lowest increase in nearly two years. which has helped proof knfitabi and according to historical data should trickle down to off price names like tjmaxx and ross.
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>> what we expect to happen in the future is that the off price retailers will see better growth margins and sales because they will see less competition from department stores. >> reporter: retailer ross stores says inventory is 40% lower than in 2007. >> this strategy made it easier for our customers to shop our stores, and has driven sales by increasing the percentage of fresh and exciting bargains they see when visiting our stores and enabled us to achieve record merchandise and lower mark downs. >> reporter: while leaner inventory may make it easier for consumers to sift through the racks, it may lead to fewer promotional offers. the better retailers get at determining that just right level of inventory, the less they will need to put on sale. for "nightly business report", i'm courtney regan. chinese buyers have been a big presence in the u.s. housing market and now they may have
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created a big opportunity. we'll explain in a moment. home builders had a spotty year so far but the luxury home builders toll brothers, net income doubled in more than $100 million over the spring as it delivered new more homes at higher prices. the average cost of a newly constructed unit is $732,000 from $651,000, just a year ago. chinese buyers have been flocking to the u.s. housing market looking to park their cash in a safe place while at the same time hoping to enroll their children in american universities. this has created opportunities for both u.s. and chinese
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developers, and some of them are now working together. diana olick has more. >> reporter: the chinese have been buying u.s. real estate and now they are building it. chinese developer is planning to put 200 condos in this site overlooking the manhattan skyline. >> the chinese real estate market is very competitive, and the u.s. housing market is growing, recovering or expanding rapidly, so for us as a company to invest a certain amount in the united states makes a lot of sense for us. >> reporter: china's preeminent green builder is putting about $1 billion into the u.s. house market beginning with three developments. this one in new jersey will be condos with priceless views. it also plans to build tone hwns and single family homes. >> the reality is these are very
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big companies. they are well-funded. the u.s., we think it's a good market. obviously, we're in it. so we shouldn't be surprised that they have come. >> reporter: they have 40 developments in asia and europe is centering on markets where job growth and information technology is strong. >> our primary customer is still here in the domestically in the united states. but because of our background and who we are and our brand in china, we will get chinese customers who will want to buy our homes. >> reporter: that's why they admit they are focussing on markets with well-known universities. chinese parents have been buying homes so their children can attend school there. builders like lennar cashed in and now lennar that sold this lot is going one step further,
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working to design and build the condos. they will use domestic workers and materials and build much in the same style as the lennar units to bring in buyers from both sides of the globe. for "nightly business report", i'm diana olick in new jersey. >> to read more about chinese developers, go to nbr.com. and that is "nightly business report" for tonight, i'm susie gharib. thanks so much for joining us. >> thanks for me, as well. i'm tyler mathisen. have a great evening, everybody and we hope to see you back here tomorrow night.
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laura: when i was young, sunlight seemed to me a solid thing... the golden promise of warmth and happiness. but where there is sunlight, there must also be shadows... a reminder that night must fall and the cold winter come. if not now... walk on. ...then soon.
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